The Oak Bluffs selectmen kicked off their first meeting of the new year on a sour note as town officials scrambled to slash money from a budget that is already $238,000 in the red.

“The good times are not going to come for a couple years,” predicted selectman Ron DiOrio gloomily.

The Massachusetts Department of Revenue has told the town to cut $238,000 from its current fiscal year budget before setting its third and fourth quarter tax rate, after revenues for the first and second quarter revenue failed to match projections. Fiscal year 2011 ends June 30, but the town’s fiscal problems, which several selectmen described as “structural,” are expected to loom far into the future.

“I believe what we’re heading toward in the spring is a general [Proposition 2 1/2] override for this town to survive because we are in deep financial trouble,” said selectman and board chairman Duncan Ross.

In a meeting with selectmen, financial committee chairman Bill McGrath pressed town administrator Michael Dutton on the origin of the $238,000 deficit.

“Our revenue tracking for 2011 in many cases doesn’t live up to the 2010 actuals,” Mr. Dutton responded, “and the Department of Revenue questioned the justification for increases in some of those line items, and they have the ability to say, no, we’re not going to accept that.”

Mr. Dutton said the town had fallen short in the first two quarters of the year in a number of categories including under a line-item catchall for fees that includes town licensing and permitting fees, charter school reimbursements, payment in lieu of taxes, town interest revenue, penalties and interest on excise taxes as well as fines and forfeitures.

In order to make up for the shortfall the town has proposed saving around $176,766 by leaving a number of unfilled town positions vacant in the short term, including that of the Oak Bluffs reference librarian, the town zoning board of appeals administrator, the town finance director, the highway heavy equipment operator and two teaching aide positions at the Oak Bluffs School.

Mr. McGrath, however, was wary of the trend toward book-balancing by attrition.

“To accept unfilled positions that happened purely by chance as being the way to run the town is in my opinion very shortsighted. The fact that we don’t have a finance director is in my opinion costing us money,” he said. Oak Bluffs finance director Paul Manzi died in October.

“If we’re going to run the town by hoping by some expensive position that’s been left vacant because the person’s been hired away or they’ve suddenly died, we’re going in the wrong direction. If we’re going to do that then I would suggest to you that we may not need a town administrator which would put us well over the $238,000,” Mr. McGrath declared in an undisguised shot at Mr. Dutton. “I think we need to look seriously at which positions, if we’re going to cut, should be cut because we don’t need that service anymore, and I think we need to look at the finance director in particular as being a critical position.”

While difficult long-term personnel decisions will have to be made for future budgets, the selectmen reminded Mr. McGrath that the town’s primary focus is on saving almost a quarter million dollars in the next few months. Other cost-cutting measures suggested by the finance committee included reducing library hours and turning off a number of street lights.

One suggestion that would take $12,000 off the books immediately would be to reimburse the town for ambulance fuel costs through the town’s ambulance reserve fund.

“It seems to me that that’s a no-brainer,” said finance committee member Mimi Davisson.

Yesterday Mr. Dutton told the Gazette that he expects the selectmen to finalize a list of cost-cutting measures by the end of the month so they can prepare a warrant for a special town meeting before the town sets its third and fourth quarter tax rates.

On Tuesday the town did consider a number of ways to cut its budget in the longer term, though, including by possibly pulling out of a continuing education program for police officers, after state reimbursements have fallen for the program in recent years, and by eliminating trash pickup for Oak Bluffs residents, a service that was characterized on Tuesday as underutilized and expensive. In November the selectmen voted to increase trash sticker prices in a move that highway superintendent Richard Combra said promises to bring in $60,000 in additional revenue. The finance committee has also suggested cutting positions at what it sees as an overstaffed council on aging.

At least one town department slated for retrenchment spoke up in opposition to the cuts. On Tuesday Oak Bluffs library trustees protested the proposed cost-cutting measure of leaving its reference librarian position unfilled.

“We’re like a ship without a navigator,” said trustee Beatrice Green. “[The reference librarian] is a very important part of our library.”

As a result of the vacancy, she argued, the town has suffered.

“The people of Oak Bluffs are used to having adult programs at their library,” she said. “We have not had any in months because there’s no one here to do that.”

Ms. Green also said the library is at risk of losing its certification unless the town cuts its budget equitably across town departments. If the library loses certification it would also lose access to state funding and would no longer be part of the inter-library loan system according to Ms. Green. Still some selectmen were unmoved.

“The position is approximately $100,000 when you add in fringe benefits, retirement and everything else,” responded Mr. DiOrio. “I think the board would be very receptive if the trustees and the director came forward with where that money’s going to be found.”

Selectmen were sympathetic to the library’s plight but spoke in terms of the town’s larger economic picture.

“No one’s arguing [about the importance of the reference librarian],” said Mr. DiOrio. “The point that needs to be discussed is that we’re in a serious financial crunch and it’s not something that’s come upon us in one year and its not of our own making. The town of Oak Bluffs has lost $200 million in real estate values according to our tax assessor. That’s the reality of the economic times that the country is in and that the commonwealth is in.”